Revenue was slightly down from the year-ago quarter, at $39.8 billion compared with $40.5 billion. EPS was up this year to 79 cents from 72 cents in the year-earlier quarter.

AT&T's stock rose nearly 3 percent after the announcement.

"Once again our team delivered expanded consolidated margins and, as a result, grew adjusted earnings per share by nearly 10% as we executed well against our business priorities," CEO Randall Stephenson said in a statement.

Postpaid churn rates, or the percentage of subscribers that cancels their service, was 1.01 percent for the quarter. The total was lower, therefore better, than Wall Street's expectation of 1.19 percent, according to StreetAccount.

"So very, very important and quite frankly, we have churn at these levels and if you can maintain it is the gift that keeps on giving with regard to revenues and margins," AT&T CFO John Stephens said on an earnings call Tuesday.

AT&T lost 199,000 subscribers, but the loss was offset by gains in its DirecTV Now online streaming service. The total number of video subscribers was essentially flat from last year, the company said.

Stephens hailed bundle packages as a way to attract and keep customers. Since AT&T acquired DirecTV, the number of wireless subscribers with TV packages, TV subscribers with wireless plans and TV subscribers with IP broadband have all increased by double digits.

"If you look up and see the details that we provided, those details I provided in my comments, it's pretty clear this ability to bundle, whether it be TV Everywhere, whether it's DTV NOW, whether it's the ability to get all of your video on your phone, is making a huge difference," Stephens said.

In March, AT&T announced it would work with the First Responder Network Authority, known as FirstNet, to build a broadband network for police, firefighters and emergency medical srevices. So far, six states have already opted into the program, Stephens said.

States will have 90 days to decide whether they will participate. Stephens expects the official clock to start in mid-September, meaning states would have until mid-December to make a decision.

Multiple analysts asked about the project on the earnings call Tuesday. Stephens touted it as a way to tap an underserved population, build AT&T's footprint, create a starting point for smart cities and bolster the company's network.

"I'm not giving specific guidance, but I would suggest to you that it is real and it is something that we're excited about, specifically with regard to the police, fire, EMT, what I think people would think as first responders. We do not have written have a very large percentage of the market share," Stephens said.

Last month, AT&T expanded the amount of local television stations it offers on DirecTV Now, an online streaming service it launched in November. The move comes amid "cord cutting," or households shunning traditional cable packages and opting instead of digital services like Netflix.